14ymedio, Madrid, 8 August 2023 — “An hour and a half of more talking about the same thing, pondering a decree that in itself is good but in the general context is useless.” This is the assessment of a reader of the official Cubadebate about the appearance of the president and the vice president of the Central Bank of Cuba (BCC), Joaquín Alonso and Alberto Quiñones, in the television program Mesa Redonda (Roundtable), to explain the process of “bankification,” collecting in a few words the perception of most viewers, judging by the reproaches launched in the parallel forum that the media had foreseen and announced.
The directors of the BCC insisted on what is perhaps the biggest news of this Monday: there will be no “zero cash” operation except in one sector: tourism. At least, for the time being. Both stressed that there will always be exchanges with physical money, among other things, because “not all the population has access to digital media or knows how to use it.”
Quiñones reiterated that what the rule dictates is that all establishments must guarantee the access and use of electronic payment channels, but it does not require their use. “The most important thing is that it is the population and not the seller who chooses the payment channel,” he clarified. That will happen, they vehemently insisted, in ration stores, markets and all kinds of shops, with one exception. “The Tourism sector has decided that all payments in hotels will be electronic. As we move forward, we will empower the population to benefit,” Alonso said.
The directors repeated for the umpteenth time the measures announced last Wednesday and later explained them in the press through interviews – such as the one carried out with the Minister of Internal Trade, Betsy Díaz Velázquez – and question and answer sessions. The greatest space was dedicated to the reasons for the approval of the “bankification” program, the main one being to redirect the economy along a legal path.
“The transactions in our economy have to be lawful activities, according to the Constitution,” said the president of the BCC. “Therefore, to the extent that operations and transactions are transparent with the bankification process, there will be less room for illegal transactions.”
The theory is good, but the users of the parallel forum did not give credence to the reality, also parallel, in which the authorities seem to live. “When will they realize that all the cash is being dominated by people in the large black and illicit market, who have no relationship with State companies, much less with the MSMEs [micro, small and medium-sized enterprises]?” asked a reader.
Another user directly accused the authorities of not understanding how the economy works. “The MSMEs are not the ones that move the foreign exchange market in cash, no. They develop their exchange rate dynamics through digital channels. (…) You have to know how that market works to understand and propose solutions. You have to understand the measures.”
The population, which has seen double-digit inflation for more than a year, was beginning to notice how some MSMEs managed to lower prices thanks to the increase in supply. The concern about how they are going to import – when buying in foreign currency and selling in pesos, in the absence of an official foreign exchange market – has been revealed in a multitude of comments. “Currently more than 90% of the products that can be purchased is thanks to the MSMEs that have proliferated and are everywhere. State stores are depressed; they do not offer what the population demands. If this measure results in the closure of the MSMEs or a decrease in what they can offer, the people will suffer the consequences, and who knows how great the damage will be,” said one user.
Supported by some graphs that the Cuban economist Pedro Monreal has described as hieroglyphs – the unit of measurement of the economic magnitudes is not shown – the bank directors explained that starting with the Ordering Task* there was an increase in money in circulation, injected by the BCC itself to respond to the higher prices, which was followed by the logical withdrawal because of the higher prices. Then, “the effect of cash outflow and reduction that is not logical in the functioning of the economy began to be distorted.”
With the arrival of the MSMEs, there also has been a setback in the use of banks, and there is a large amount of cash outside the banking system, especially so far this year. Therefore, the State intends to recover it by promoting technology – which must be strengthened – encouraging electronic payments with discounts and benefits, and reminding people that these methods work seven days a week, 24 hours a day.
Cubans seem to know that the idea is desirable but difficult to realize on the Island. “The measure is implemented at a bad time. We are not prepared, and we are not a normal country. Let a few months pass and you will see the consequences,” said another forum member.
Alonso and Quiñones also tried to establish the idea that “bankification is a gradual process.” They repeated this on several occasions and even added that the population demanded the measures, as was seen “in the debates of the recent ordinary session of the National Assembly of People’s Power.” Just a few hours ago, the economist Pedro Monreal, who exposed on his X account (formerly Twitter) his reflections on the measures, defended a completely different idea.
“There has been talk of ’bankification’ for a long time, but a program to implement it did not seem to be urgent. However, the sudden announcement of Central Bank resolution 111/2023 has caused public concern,” he wrote. “The unexpected resolution seems to denote an urgency not observed before. In the July parliamentary session, ’banking’ was barely mentioned, nor did the ’zero cash’ pilot test of the Electric Company, and Cimex did not reveal urgency,” he continued.
The specialist said that the emergency means they are trying to devalue the dollar. “The recent price of the dollar has had an almost vertical trajectory. Between June 22 and August 7, it rose by 19%.”
For Monreal, delaying the situation is vital due to the inflationary effect of transferring the devaluation to the prices of the formal and informal markets and for something less tangible: the general perception of the failure of the Government’s economic recipes. But in this there is no turning back, and the users of the forum organized by the ruling party made it very clear. In the words of one of them: “The Ordering Task was just as optimistic and look at the good it did.”
*Translator’s note: The Ordering Task is a collection of measures that include eliminating the Cuban Convertible Peso (CUC), leaving the Cuban peso as the only national currency, raising prices, raising salaries (but not as much as prices), opening stores that take payment only in hard currency, which must be in the form of specially issued pre-paid debit cards, and a broad range of other measures targeted to different elements of the Cuban economy.
Translated by Regina Anavy
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